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The much-awaited third-quarter gross domestic product number to be released Thursday is expected to show a 3.5 percent increase. In the view of most economists, a positive number will mark the end of the recession which began in late 2008. But a positive print in the GDP is so widely expected that it is now old news, and as a result, the market is primed for a "buy the rumor, sell the news" moment.

Though this increase in GDP is almost universally viewed as "proof the recession is over," the market may not play along. Why? The federal borrow-and-spend stimulus and bank bailout was intended to act like lighter fluid on the real economy's damp logs: contracting credit, declining employment and tax revenues, and a housing market that is still weak.
Now that the flammable liquid has been expended, the market is looking for evidence that the logs of the Main Street economy have actually caught fire. The data is mixed, at best. While housing sales have risen, some analysts are saying that's a result of the data being fudged in "seasonal adjustments": sales are considerably lower than last year's.

That isn't the only questionable data.

While many pundits are already announcing that the recession is history, at least a few economists are noting that when the economy turned the corner in downturns past, employment has recovered quickly. Yet here we are with a positive GDP, and job losses are still piling up.

If payrolls are still falling by 500,000 a month, how much does the announced "end of the recession" actually mean to Main Street? If real estate is still falling in value, revenues are declining and jobs being lost, then exactly what is powering the rise in GDP?

The answer, of course, is government spending.

The federal budget deficit this fiscal year ($1.4 trillion) was about 10 percent of the nation's annual GDP. Add in the hundreds of billions in guarantees, backstops, loans and other giveaways to banks and financial institutions like Fannie Mae and AIG, and it can be argued that the federal government borrowed and then injected well over 10 percent of the annual GDP into the economy.

From this point of view, spending 10 percent of GDP and only getting a 3.5 percent uptick is a rather paltry return on an investment made with borrowed money.

Have the logs of the real economy caught fire? If so, they might be smoldering but they certainly aren't burning brightly. Many analysts look at rail traffic as evidence of the real economy's health -- freight is not a data point which can be spun with "seasonal adjustments" or other accounting trickery.

Rail traffic has plummeted, and while it has stabilized, it has done so at a very low level of activity. If the economy is indeed growing organically -- that is, not just from Federal stimulus -- then we would expect to see a spike in rail traffic. Such an increase isn't visible yet.

Since the financial sector launched the current stock market rally eight months ago, we might look to this same sector to lead a decline. If so, one analyst's change of heart on Wells Fargo Bank (WFC) might be a harbinger of things to come: The analyst issued a rare "sell" on WFC as credit card and mortgage losses continue piling up.

If we look at a chart of WFC, we notice that the stock has more than tripled from its March lows -- a fantastic return in only eight months. But we also notice volume -- the weapon of the bull -- has been declining since May, other than a brief spike earlier this month.

That spike in volume drove the price above $30 per share, but it quickly dropped back to a level around $30 which has acted as congestion/resistance for this stock in the past.

Having closed at $29.32, the stock is only $1 above its 50-day moving average -- a line used to gauge trend. A close below the 50-day MA line would suggest weakness and a possible reversal of trend should Wells Fargo not quickly bounce back to the $30 range.

Low-volume rallies worry technical analysts, as they often presage nasty sell-offs when buying dries up and reasons to sell (such as a close below a key technical level) materialize.

Any weakness in financial stocks before Thursday's announcement of GDP would suggest that some players aren't waiting around to sell the news -- they're booking their profits from the rally now while they still have them.

Charles Hugh Smith writes theOf Two Minds blog and is the author of numerous books. His most recent is Survival+: Structuring Prosperity for Yourself and the Nation.